The Sandbag CBAM study (June 2024) sees negative effects for European steel processors:
The analysis shows that the CBAM will have greater disadvantages for European steel manufacturers than for importers based in third countries. In particular, EU manufacturers of intermediate and finished goods, which use more expensive raw materials, will be less competitive than their competitors in third countries, as most imported finished products at this stage are not covered by the CBAM and can be sold on the EU market at no additional cost.
In the 'resource shuffling' scenario, for example, steel producers or processors from non-EU countries circumvent the system by exporting their 'low-emission goods' to Europe and selling the 'high-emission goods' on other markets. Overall, the CBAM will lead to higher costs and higher prices for products sold in the EU and will probably be passed on directly to EU consumers. In the 'resource shuffling' scenario, third country importers could even benefit from the system by paying a lower CBAM while being able to sell their products at higher prices compared to their EU competitors.
According to Sandbag, it is uncertain how the players will behave, It will be important to eliminate the 'loopholes' of the CBAM accordingly and to tighten the system if necessary.
For more information about the study click here
